Bank Accuses Investment Houses of Lying About Mortgage Backed Bonds

“(T)he differences between the values ascribed to these properties and the prices at which the properties were sold in foreclosure are significantly greater than the declines in house prices in the same geographical areas over the same periods,”

Editor’s Comment: BINGO! Use this complaint for both discovery and as a pleading guide. Send me a copy of al pleadings when you get them. There a bank that gets it. They are manipulating the home values on the back end the same as they did on the front end. First they lied to borrower (debtor) and investor (creditor) about the value of the property when the loan was funded and then they lied about the value when the house was sold in foreclosure. Charles Koppa is close to publishing a study that shows that the price of most homes sold on the courthouse steps is dropped the morning of the sale to a price far below the fair market value of even the most distressed property.

‘About That $19 Billion …’

By DAVE TARTRE

SAN FRANCISCO (CN) – The Federal Home Loan Bank of San Francisco demands $19 billion from major banks and investment houses it accuses of lying about the quality of the subprime mortgage-backed securities they created and sold. The FHLB sued Deutsche Bank, Credit Suisse, JPMorgan Stanley, UBS, Banc of America, Countrywide Financial and others in two Superior Court complaints.
The FHLB claims the lending giants, including now-defunct Bear Stearns, Greenwich Capital Markets, RBS Securities and others failed to disclose material facts about the mortgages, such as how much equity the borrowers had in their homes, and that the omissions and misrepresentation led to much greater rates of foreclosures than promised.
The firms used exaggerated property appraisals so the loan-to-value ratios of the mortgage loans in the securities’ collateral pools understated the risks, according to the complaint.
“(T)he differences between the values ascribed to these properties and the prices at which the properties were sold in foreclosure are significantly greater than the declines in house prices in the same geographical areas over the same periods,” the FHLB says.
In addition, the number of borrowers who actually lived in the houses was lower than the defendants represented, and the borrowers’ credit scores were lower too, the FHLB says.
The lending giants did not tell the FHLB that their loan “originators were making frequent … exceptions to underwriting guidelines when no compensating factor was present,” and the originators systematically failed to detect or prevent borrower fraud, according to the complaints.
According to one complaint, “the Defendants sold or issued to the Bank 98 certificates in 80 securitization trusts backed by residential mortgage loans. The Bank paid more than $13.7 billion for those certificates. When they offered and then sold these certificates to the Bank, the defendants made numerous statements to the bank about the certificates and the credit quality of the mortgage loans that backed them. On information and belief many of those statements were untrue. Moreover, on information and belief the defendants omitted to state many material facts that were necessary in order to make their statements not misleading.”
The other complaint states: “the defendants sold or issued to the bank 36 certificates in 33 securitization trusts backed by residential mortgage loans. The bank paid more than $5.4 billion for those certificates. When they offered and then sold these certificates to the bank, the defendants made numerous statements to the bank about the certificates and the credit quality of the mortgage loans that backed them. On information and belief, many of those statements were untrue.”
The FHLB would like its $19.1 billion back. Its lead counsel is Robert Goodin with Goodin, MacBride, Squeri, Day & Lamprey. 

9 Responses

  1. Hi Neil, i have already sent you the case on your email. The Case # CGC.10.497839

  2. I believe it an incestuous carry on at best and a a ponzi scheme infact

  3. DyingTruth

    re-QLS- aka tribe of weasels .. lets share.
    i would luv nothing more than seeing their lying asses nailed to the mat!
    freak 4 u at comcastdotnet

  4. after searching myself to find a solid claim in ca bk court,
    i researched fraudulent conveyances , if i recall ; a foreclosure –
    that is non collusive is omitted as fraudulent conveyance ..but if proven collusive ..ie dropping the bid price 1 hour before the auction for the benefit of cleansing the title [i subscribed cleansing to this as 1st theory] , this may [ my 2nd theory ]if proved lead to a conveyance that may be deemed a fraudulent and attacked or avoided § 548. Fraudulent transfers and obligations.
    http://www4.law.cornell.edu/uscode/usc_sec_11_00000548—-000-.html

  5. “The FHLB sued Deutsche Bank, Credit Suisse, JPMorgan Stanley, UBS, Banc of America”

    OMG, that cast of characters are all over SEC filings associated with our “servicer”. To bad its not a class action. This should prove very interesting indeed. Thanks for posting it!!!

  6. “and the originators systematically failed to detect or prevent borrower fraud, according to the complaints.” did it ever occur to the Bank that from all “misrepresentations” and “misleading statements” from these originators that perhaps it wasn’t “borrower fraud” but “originator fraud” or “broker fraud” which is what originators are, what a buch of crooked idiots looking to cast the blame on the most vulnerable and least wealthy. these pigs act like the borrowers got rich and are living a life of luxury all from these broker’s misrepresentations, and the brokers didn’t make a fortune off of the fraud.FAR FROM THE TRUTH

  7. My theory is that bid prices are set well below distressed property prices to entice buyers with hard cold cash to effect a bonafide sale on the courthouse steps.. A bonafide sale to a third party (at least in CA) has the effect of “cleaning up” the title to the extent that any claims raised by the former owner would be limited to damages (hard to prove especially when the sales price was manipulated to a level far below amounts owed). Think of it like this. A thief usually wants to unload his stolen goods fast. They’re “hot”, and they become evidence if he is caught while still holding the goods. Title insurers like a bonafide sale to a third party for the same reason. It greatly reduces the risk of any claim.

    Dumping the properties on the cheap is easy when you don’t have any investment, much like the thief at
    a pawn shop, main objective being to unload the “hot”
    merchandise for some quick cash.

    The foreclosing servicers, trustees and other non-creditors also enjoy the extra benefits of forcing the neighbors into default to set up the future theft and
    hocking of those homes. It really might be that simple.

  8. Wow. This should provide all of us with needed pleadings and facts.

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